Nigel Harris

Store wars

(March 1987)

From Socialist Worker Review, No.96, March 1987, p.7.
Transcribed & marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

WHAT A pity! After all the huffing and puffing Reagan climbed down and the long threatened agricultural trade war between the United States and Europe fizzled out.

If the two had started to fight, there was just a chance that the Common Agricultural Policy of the EEC would have received such a battering, it would have folded – the ageing New World would once again have rescued the Old from its lunacies. But it ended with a whimper, not a bang.

What was it about?

The US claimed that when Spain joined the Common Market in January of last year, the increases in the tax (or tariff) on the Spanish imports of maize and sorghum (for animal fodder) from the US cost Americans 400 to 500 million dollars (not a lot on the EEC bill for imports from the States of 53 billion dollars).

Washington demanded compensation – the EEC should agree to import an extra 4 million tonnes of grain, reserving 2.8-3 million tonnes for US suppliers. If the EEC refused to do this, the US would impose a tax of 200 percent on European exports to the US of cheese, white wine, brandy, ham, gin, olives and other things.

Europe offered to increase its grain imports from the rest of the world by 1.6 million tonnes, 1.2 million tonnes of which might be taken up by the US.

Furthermore, if the US tried to punish Europe by taxing other imports, the EEC threatened to levy an extra 50 percent tax rate on imports from the US of 395 million dollars worth of maize gluten, wheat and rice.

Both sets of gangsters were fast on the draw, standing tall, as Reagan might say, on Main Street.

Two days before the US-set deadline, both sides climbed down. The EEC agreed to import two million tonnes of maize from the rest of the world, 300,000 tonnes of sorghum, and an extra 450,000 tonnes of other cereals. Furthermore, it would cut import duties on 20 other industrial items for four years to help Washington.

The skirmish is over, and disappointingly so, but the war must continue. In agriculture the EEC is the rogue shark and must collide with the largest agricultural exporter, the US.

The new Congress is keen to find popular targets for American hostility, and it is easier to attack the importers of US goods than expand US exports or cut Reagan’s heroic budget deficit (as the result of arms spending).

But what they see as hitting foreign importers by punishing their exports in fact punishes American consumers.

A 200 percent tax on US imports of European cheese punishes American cheese eaters more than it hurts European cheese makers. Furthermore, this “cost” is not justified by any other gain.

Import controls have saved no jobs in textiles where there have been controls on imports for 30 years. The price of Japanese-made cars is increased by 15 percent in Britain as the result of import controls – and by nearly £1,000 in the United States. The buyers are fleeced with import controls, not the foreign exporters.

Reagan is not driven just by the new Democrat dominated Congress. The Congressmen are baying against foreigners to persuade American voters that, contrary to all appearances, someone in Washington cares. But Reagan is also desperate to avoid increasing taxes as he keeps up spending on arms.

To do that he must cut non-military, spending – and the subsidies to agriculture are a prime target.

US farm policy has shifted from paying heavily to persuade American farmers not to grow crops to trying to force an expansion in exports to get rid of the surpluses.

This is impossible to do by fair means while the EEC so massively subsidises agricultural exports. The issue is not the European market, but all the third markets of the world where the US and Europe compete.

The problem is getting desperate as farmers produce more and more on both sides of the Atlantic. World grain stocks – now about 375 million tonnes – have increased 50 percent since 1984 (you thought there were famines!). US exports of wheat, peaking at 50 million tonnes in 1981, were under 20 million in 1985.

If the Americans could only eliminate the European share, about 20 million tonnes, then Reagan’s budgetary problems would have some slight relief.

This is where everybody starts playing dirty, while claiming a monopoly of crystal virtue. In mid-1985 Washington announced an “Export Enhancement Program” to subsidise exports to whatever third markets the EEC exported to. Since then 655 million dollars have been spent in the campaign to beat Europe.

Late last year Poland was offered grain to beat off the EEC. In early January Switzerland was offered 250,000 tonnes of barley and sorghum. In February China was offered one million tonnes of wheat – all subsidised.

Of course, the US paid little attention to countries that exported grain without subsidies (Australia, Canada, Argentina, for example). Nor was much consistency introduced – as the US dumped its grain abroad, it cut sugar imports from the Caribbean by 40 percent. All issues were subordinate to confronting the marauder shark of the EEC.

It has to be war – or so everyone should hope. The racket in agriculture is too extreme. The eighth round of GATT (General Agreement on Trade and Tariffs) talks held to liberalise trade began last autumn in Geneva, but here the Americans and Europeans cosily collude to exclude agriculture and reject the demands of other major exporters and the Third World.

The two arch champions of efficient capitalism thus block the exports of the efficient in favour of their own inefficient and heavily subsidized exports. In such circumstances one can only hope for a war between the two wings of the Mafia on each side of the Atlantic.

The battle between Washington and Brussels epitomises the lunacies of the system. For punishing the foreigners is actually punishing the home population, especially the poorest.

Western controls on the import of garments from the Third World punish the buyers of garments here, especially the poorest ones.

The poor of Britain are able to buy fewer cheap clothes as the result of protection. It is a mark of how much we swallow the arguments of the employers that everyone chatters about saving jobs, not about protecting the poor. Own goals are the means to punish the wogs!